S&P Global Ratings changed the outlook on China Bohai Bank (HKG:9668) to stable from negative, driven by reduced pressure on the bank's credit profile, according to a Monday release.

The rating agency now expects the bank to further refine its asset quality through narrower risk appetite and greater internal risk control.

The bank will also keep solid capitalization by reducing asset growth amid weaker profitability, S&P said.

The rating agency sees the bank lowering its nonperforming asset (NPA) ratio to 6.31% in 2026, down from a peak of 11.6% in 2022 and closer to the sector's 5.75%.

To control its high-risk assets, the bank has gotten rid of NPAs of about 2.3% of its average total loans in the last year, S&P said.

Still, the rating agency expects the property sector to continue posing asset quality risks amid weak industry prospects.

S&P forecasts the bank's risk-adjusted capital ratio to hit 5.5% at the end of 2026.

The rating agency places two notches of uplift to the bank's standalone credit profile due to the likely government support if needed.

S&P affirmed the bank's BBB- long- and A-3 short-term issuer credit ratings.

A rating downgrade is possible under a significant decline in the bank's asset quality compared to the industry average.

Meanwhile, S&P does not see an upgrade in the next two years due to difficult economic conditions.

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